Bonjour,
The French grammar of "qui te perds" is a bit baffling here is it not? I don't quite understand what the sentence is trying to say. Is it a mistake or an unusual construction in French? What are people's thoughts?

Neither a mistake nor particularly unusual, it's just the poet speaking directly in the 2nd person to the lumière amoureuse.

"O soft light who lose yourself in the sky..."

Your confusion comes from the fact that such a form of address is awkward in English, and we would tend to add the subject pronoun back in ("O soft light, you who lose yourself...") or mistakenly switch to the third person ("O soft light who loses yourself..."). I've kept the "lose yourself" instead of switching to something like "fade" solely for the purpose of illustrating the grammar.

For comparison, this is the same form of address as the more familiar "Our Father who art in Heaven...". Although we may tend to think of the old-fashioned sounding Biblical line as meaning "Our Father who is in Heaven" in the 3rd person, this is not the case, grammatically speaking. The subject of "art" is "thou" -- thou art, you are, 2nd person. So in modern English, where we don't use "thou," that would be, "Our Father who are in Heaven..."